[04:35:07 PM] => Myiris : Welcome to the live chat session.
[04:35:41 PM] => Myiris : Our guest, Mr. Suresh Soni, Asst.Vice President - Investments & Fund Manager, Pioneer ITI Mutual Fund, will be joining us shortly.
[04:35:58 PM] => DISCLAIMER
[04:38:04 PM] => Mr. Suresh Soni is the Asst.Vice President - Investments & Fund Manager, Pioneer ITI Mutual Fund. At the time of this conversation / chat, Mr. Soni may or may not have positions in the stocks mentioned below, although holdings may change at any time. The views expressed by Mr. Soni is based upon information that he considers reliable, but does not represent that it is accurate or complete, and it should not be relied upon as such. Mr. Soni, his company and its affiliates, officers, directors, partners, and employees may, from time to time, have long or short positions in, buy or sell and deal as principal in the securities, or derivatives thereof, of companies mentioned herein and may take positions inconsistent with the views expressed.
[04:39:20 PM] => None of the information contained herein constitutes, or is intended to constitute a recommendation of any particular security or trading strategy or a determination that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. You should consult with and rely upon your own advisors whether and how to use such information in making any investment decision.
[04:41:42 PM] => Lastly the views expressed by Mr. Soni have no bearing whatsoever with that of IRIS Ltd. IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website www.myiris.com.
[04:41:53 PM] => Welcome to the chat session Mr. Soni.
[04:43:21 PM] => mohammed_shahid2001 : What do you thing about the G-sec market as a whole do you think the rally in the G-sec market to continue in the near future?
[04:44:04 PM] => annai-s : How long will the bull run be?
[04:44:25 PM] => Saini : How do you see the GILT prices movement over the next quarter?
[04:45:04 PM] => SS : The bond markets have been on a heady bull run in last couple of months on the back of easy liquidity and increased appetite for gilts in absence of any significant credit off-take. Added to this is the fact that one of the leading Financial institution is trying to convert itself into a universal bank and has to buy gilts worth 15000 crores. All these factors have led to a bullish trend in the Gilts market.
[04:46:21 PM] => The heady Bull Run in the bond markets finally came to a halt last week as RBI upped its pace of Open Market Operations (OMO). After having announced an auction for Rs.6000 crores earlier in the week, the central bank announcement of another auction of Rs.8000 crores took the players by surprise.
[04:47:50 PM] => The recent OMOs seem to indicate that RBI is not comfortable with the pace of rally in the markets. While RBI finally sold only Rs.1350 crores worth of securities of Rs.8000 crores put up for auction, which means there hasn’t been a significant decrease in liquidity. On the news of the auction, bonds fell sharply by about Rs.2 at the long end as yields firmed up by around 30 bps.
[04:48:39 PM] => With ample liquidity around, we expect gilt prices to be on a gradual upturn. However, there is unlikely to be very substantial price appreciation in the near term as market will be vary of further RBI actions to stem sharp rallies.
[04:49:06 PM] => sindhuja92: I have bought H.F.C. L at Rs 119. How long shall i hold it what profit can I expect with stop-loss?
[04:49:33 PM] => SS: No comments
[04:51:07 PM] => Kartikeyan : If Japan devalues its currency do you expect India to follow suite. Likely impact of Japans recessionary trend and action (of devaluation ) if taken on the South East Asian Economies mainly China and India?
[04:54:05 PM] => SS : Unlikely. In last few years Indian forex market has been distancing itself from some other developing markets as foreign reserve built up in India has been fairly strong. The events like Argentina would have had much more impact a few years back but currently in the wake of strong FX reserve back home this has been completely ignored by the market.
[04:57:43 PM] => GM : When investing in debt what are the parameters that a fund manager sets while choosing the instruments?
[04:59:07 PM] => SS : We look at maturity levels as a function of interest rates and adopt a dynamic maturity management style in order to take advantage of the market sentiments. For example,
[05:00:00 PM] => 1) Until Sep 2000 we had reduced the maturity levels as the interest rates were volatile and call rates were high.
[05:01:01 PM] => 2) The period of Oct 2000 till date has seen an increase in our maturity levels as we sought to take advantage of the positive movements in the medium to long dated bonds consequent to the decrease in interest rates.
[05:03:14 PM] => The objective is to limit downside and to exploit opportunities available while at the same time staying within prudent limits and avoiding an aggressive stance
[05:06:11 PM] => 1) Willingness to pay - not just the ability
[05:06:26 PM] => 2) Try to avoid negative surprises
[05:06:39 PM] => 3) Try finding mis-priced securities
[05:07:24 PM] => Sanjays : Could you tell me about the performance of Pioneer ITI debt funds?
[05:09:13 PM] => SS : Pioneer ITI today manages about Rs.2100 crores in assets for more than 50,000 investors in its various income and cash schemes. Pioneer ITI Income Builder Account and Monthly Income Plan have been performing quite well compared to their peer group. The past performance for the funds is as given below :
[05:10:24 PM] => Income Builder Account - 20.2%(1 year returns), 14.2% ( 3 year), 14.4% (Since inception)
[05:10:47 PM] => Monthly Income Plan - 16.1%(1 year returns), 15.3%(Since inception)
[05:11:01 PM] => *Past performance is not a indicator of future performance. Annualized compounded returns as on 29.11.2001.
[05:11:51 PM] => BR : Your view on interest rates? Could it go down further?
[05:13:00 PM] => Guest 34 : Regarding interest rates, do you foresee a reversal in trend in the near future?
[05:13:56 PM] => The central bank’s objective in the monetary policy was to bring down interest rates and that is what has happened.. With no significant increase in credit offtake and no concrete signs of an economic turnaround, we expect the high liquidity levels to keep interest rates soft.
[05:15:14 PM] => However, with this sharp drop in the yields, a lot of key interest rates have fallen out of sync. To reduce the mismatch, the interest rates on Provident Fund, RBI Relief bonds and small savings schemes need to be cut down. The same holds true for bank deposit rates as well. With sluggish credit growth and limited alternative investment avenues, banks are likely to reduce interest rates on deposit and credit.
[05:15:35 PM] => From the current levels we see a limited scope for further fall in bond yields.
[05:16:21 PM] => Meena S : Can you tell me the current cash levels in each of your funds?
[05:16:53 PM] => SS : Income Builder Account : 5%, Monthly Income Plan : 9% (as on November 29, 2001)
[05:17:25 PM] => Hariharan : What are the target returns you are planning for Income builder?
[05:18:25 PM] => SS : With the sharp drop in the yields the expectations of return from income funds should be around 7% to 10% over the next one year.
[05:21:14 PM] => Raghu : Is Pioneer ITI planning to launch any new schemes?
[05:22:28 PM] => SS : Yes, we are looking to launch new innovative equity schemes and a short term income fund in the next quarter.
[05:27:09 PM] => M Rao : Sir, I am a pensioner and I want to invest in mutual funds. I am tempted to go in for equity considering the current surge, but what are the right schemes for me to invest in?
[05:28:26 PM] => SS : Since you have already retired, we would advise you to invest in income/cash funds, which will provide you with steady income, rather than in equities that tend to be volatile.
[05:28:52 PM] => Ganesh Murthy : Sir, What is the average duration in your debt portfolio?
[05:29:20 PM] => SS : The current average maturity period of Income Builder Account is 5.90 years. This corresponds to a modified duration of about 4.5 years.
[05:30:08 PM] => Shalini : I would like to invest in debt. But have no clue whether its the right investment for me. What do I look at before putting money in debt funds?
[05:31:58 PM] => SS : Before setting out to invest in any asset class, our advice is for you to first analyse your investment objectives, risk preferences and time-frame for investments. This will help you in coming up with a financial plan and asset allocation that will be tailor made to you. You can find such planning tools on our site as well as other personal financial portals.
[05:32:28 PM] => With regard to debt funds, you need to look at the track record of the specific fund, relative performance among its peer group, portfolio credit quality, volatility and transparency levels before investing.
[05:35:13 PM] => Manishm : Do our fundamentals support such low interest rates?
[05:35:50 PM] => SS : Over the last 10 years, the inflation has declined from about 8%-10% to 2%-3% now. Along with this tariff barriers have come down sharply. While nominal interest rate appears very low currently, the real interest rates have remained virtually at the same level of about 5%-6% as they were about 10 years back. Over this period, our country has seen fairly high fx inflows leading to higher liquidity.
[05:37:25 PM] => R Yadav : If I invest Rs 25,000 in income funds, what returns can I expect in say 6-months time?
[05:37:41 PM] => SS : Over next 1 year at the range of 7%-10%.
[05:38:14 PM] => S_Puneet : What will be the impact of Pioneer quitting its JV with you?
[05:38:43 PM] => SS: It’s a speculative question. No comments.
[05:39:04 PM] => Raju : How would you compare the performance of your debt funds vis-a-vis your competition?
[05:39:31 PM] => SS : Our funds have done fairly well. We are consistently in the top quartile in all our income/liquid funds.
[05:40:41 PM] => Madhavan : How much does one go by all the rankings of MFs done rating agencies and others? Does it make sense?
[05:41:30 PM] => SS : By and large we find them to be reasonably representative of the performance. However we advise considering 2 to 3 different ranking agencies to form an unbiased opinion.
[05:42:55 PM] => R_Kurup : Sir, Will it be better to invest in gilt funds or income funds in the current market?
[05:43:28 PM] => SS : Gilts being the most volatile segment of the bond market, Gilt fund should account for around 15% to 25% of the income fund portfolio.
[05:44:20 PM] => Sohrab : Sir, Are you concerned about the volatile interest rates situation. How far does the management view gets affected long-term?
[05:45:10 PM] => SS : Volatility of interest rate is a fact of life. I guess the investors and the players in the fixed income markets have to be well prepared to accept it.
[05:45:54 PM] => NG : With the equity markets on the rise again will inflow into debt go down?
[05:47:28 PM] => SS : Even in the heady bull run of 1999-2000 income funds saw consistent inflows. In fact, bulk of the investments in income funds are from corporates/HNIs/Pensioners. These investors do not generally play in the equity market.
[05:49:13 PM] => Suhas Patel : Sir, what kind of returns can be expected from gilts?
[05:49:54 PM] => SS : Long term gilt funds have generated around 30% annualized returns over the last one year. They tend to be the best play on a declining interest rate scenario. Over the next one year the returns could range from 5% to 15%.
[05:50:27 PM] => mathai_kurien : Sir, How come Indian markets are insulted from the current downturn? Does the rally look real? Is there more to it than meets the eye?
[05:51:41 PM] => SS : I presume this question is about equity markets. Equity markets are rising on the back of an extreme sell off. The rally is for real as valuations are compelling in a lot of companies.
[05:52:56 PM] => NM : How have the spreads between corporate debt and g-secs been moving? Has this level been falling from the 140 basis points level?
[05:57:02 PM] => SS : The spreads between 5-year gilts and corporates are around 130 to 140 basis points. This appears fairly attractive as this is almost 20% over the base rate of 7.2% on 5-year gilts. We will expect the spreads to converge over the next few months.
[05:57:42 PM] => NM : How have the spreads been moving between the commercial papers and t- bills? how has the CP market been? With the yields on g-secs been moving up, do you see borowinh through corporate debt moving up?
[06:01:56 PM] => SS : The CP/T-Bills market awaiting a decline in short term interest rates by a possible cut in repo rate. The spreads between the two have been fairly steady at around 75 to 200 basis points.
[06:13:18 PM] => Myiris : Sorry for the delay...we'll continue the chat in a short while..
[06:31:18 PM] => Myiris : We are unable to continue the chat due to technical difficulties. We'll be incorporating the answers to the rest of the questions in our chat transcript which will be posted on our site www.myiris.com.
[06:32:11 PM] => Myiris : Thank you all for your participation.
[06:32:45 PM] => Myiris : We thank Mr. Suresh Soni for his time and insights.
[06:34:02 PM] => Myiris : We'll be back on Friday, Dec - 14th with our next programme at chatmasala.
[06:35:30 PM] => Myiris : Till then bye from us.
[06:57:24 PM] => Continuing the last part from the chat with Mr. Suresh Soni....
[06:57:41 PM] => hujefa : Where do you see 10 year Gilt yield settling down?
[06:57:59 PM] => SS : Currently, 10 year Gilts are trading at around 8.10% yield. In the near term, we do not foresee the yield falling below 8%. Its likely that we will see a range trading between 8%-8.25% for the next few weeks. However, in case the government moves ahead with cuts on PF/Small Savings scheme as expected by Jan-Feb 2002 we could see dipping to 7.5%-7.75%.
[06:58:11 PM] => smjmf : Which is the best scheme apart from the children's scheme for an investment for 15 years?
[06:58:36 PM] => SS : Apart from the Children’s scheme, I think you could set aside some money for investment in well-diversified equity funds. Equities generally provide superior returns over a long time frame.
[06:58:49 PM] => phaedrusx: What would you attribute the successful run of Pioneer ITI income schemes, especially since you have taken over?
[06:59:14 PM] => SS : Many thanks. But sincerely I don’t think I deserve all the credit. In line with the changing environment in the market our fund house has increased focus on income/liquid funds over the last few years. This is seen our income fund assets grow from around 300 crores in April 2000 to about 2100 crores now. Our income funds have been among the best performing.
[06:59:34 PM] => shakochar: I invested in Income funds during the first week of May 2001. Since then Its NAV has appreciated considerably, giving annualized return of more than 25 %. However given the abnormal rise in bond prices over this period, is it right time to exit from those funds. What are the chances of NAV falling down from the current levels.
[06:59:56 PM] => SS : Given the easy liquidity in the money markets, we do not see any serious correction in the bond prices in near term. We would suggest you stay invested. However, please note that the returns going forward are likely to come down to market interest rate levels.
[07:00:15 PM] => preetam_banerjee : When should I enter in market, as I am new in this field.
[07:00:27 PM] => SS : Timing the market does not always help. Today is as good a day for investment as any other day could have been. But please do remember that you come with a time perspective of atleast 6 months to one year in income funds. Anything shorter than that should ideally be invested in liquid funds.
[07:00:38 PM] => shakochar: I invested around 40000 in Income fund during May 2001. Over the last 6-7 months its NAV has appreciated a lot because of fall in interest rates. Is it the right time to exit from Income funds and look for other safe avenues. Is the NAVs of income fund likely to go down in future or will they stabilize at this level?
[07:00:49 PM] => SS : Please refer to my earlier reply.
[07:01:24 PM] => Myiris : Thank you all and see you soon on myiris chatmasala!